Teamster Union-Boss Pension Plan Contributions ‘Were Not Sufficient to Make Good on the Benefits Promised’

Teamster czar Jim Hoffa (right), pictured here with Democrat presidential hopeful Bernie Sanders, is trying to pin the responsibility on someone else as unionized rank-and-file active workers and retirees face the loss of “as much as 50, 70, and even 90 percent of their pension benefits.” But the fact is, Mr. Hoffa and other Teamster chiefs bear the lion’s share of the blame. Image: Joshua Roberts/Reuters

Late last week, more than 3000 retired truckers, union officials, and unionized active truckers converged from around the country to hold a rally at the U.S. Capitol. The Teamster union boss-instigated protest decried “what could be the biggest cut to the largest multi-employer pension fund in U.S. history,” as Fatima Hussein of the Cincinnati Enquirer wrote in her account of the rally. (See the link below to read the whole thing.)

With just one exception, the prepared speeches at the rally were delivered by union bosses, including International Brotherhood of Teamsters czar Jim Hoffa himself, and their puppet politicians, rather than by the current and future retirees and their loved ones who face economic hardship as a result of sharp reductions in Teamster boss-overseen retirement benefits.

According to Hussein, well over 400,000 “retirees and active Teamsters nationwide” received letters in September 2015 “detailing the percentages of how much they would lose” of the pension benefits they had been promised. And in the Cincinnati area,

[R]etirees are saying they would lose as much as 50, 70 and even 90 percent of their pension benefits. They fear they will lose their homes, [and perhaps] even end up homeless.

The MPRA was adopted during the “lame duck” session of Congress at the end of 2014, when then-Majority Leader Harry Reid (Nev.) and his fellow Democrats still controlled the Senate agenda. No public hearings were held on this legislation prior to the House and Senate votes on a measure altering 40 years of labor law, and paving the way for unprecedented cuts in benefits for current retirees in multi-employer pension plans, which President Obama signed into law 16 months ago.

Media reports have estimated that the pensions of 1.5 million future and current retirees, the vast majority of them unionized, could be reduced by at least 30% as a consequence of the MPRA.

At last week’s rally, Mr. Hoffa and other union bosses and Big Labor politicians like U.S. Sens. Al Franken (D-Minn.), Elizabeth Warren (D-Mass.), and Sherrod Brown (D-Ohio) bemoaned the harm the MPRA is authorizing.

Hoffa’s purported distress about the cuts is hard to swallow, because they were approved by an eight member Central States board, and four of the board’s members are appointed by Teamster officials. And the outcry from Franken, Warren, and Brown is equally incredible, since they all voted for the FY 2015 Omnibus Spending Bill, of which the MPRA was a part.

As sad as the plight of Teamster and other retirees who were counting on union boss-controlled multi-employer pension plans is, union officials and the politicians who carry their water surely understand that the only alternatives to the MPRA were legal bankruptcy or a massive taxpayer bailout of Central States and other similar Big Labor funds.

Now that they are in the Senate minority, Democrat politicians are pushing for a Central States bailout. But Franken, Warren and Brown obviously didn’t think the time was right during the 2014 lame-duck session, just before their caucus was set to lose majority control of the chamber.

Regardless of what Congress decides to do now, if anything, about the MPRA, everyone should recognize that Hoffa himself and other current and former Teamster chieftains bear most of the blame for the hardship rank-and-file Teamster retirees and future retirees are now facing.

Over the course of much if not most of their working lives, the current and future retirees who belong to the Teamsters, the plumbers, the sheet metal workers, and other unions whose pension plans are now under the knife were forking over forced dues and fees to Big Labor bosses.

And one of the handful of jobs that union officials were supposed to do in exchange for the hundreds of millions of dollars in conscripted money they took in was to ensure that the pensions those workers had been promised were there when they needed them. But now it’s obvious that a large share of forced dues-paying workers in multi-employer plans did not have secure pensions.

On the question of how the ongoing Central States pension catastrophe, in particular, happened, Hussein cited the expert opinion of Olivia Mitchell, a professor of pensions at the Wharton School of the University of Pennsylvania. Mitchell told Hussein she wondered how the union hierarchy “could sit by and allow the pension fund to lose so much money.” But poor and, in some cases, possibly unethical investment choices weren’t the main problem:

“The basic problem was that contributions put into the multi-employer pension plans were not sufficient to make good on the benefits promised,” Mitchell said in an email. “And the so-called ‘guarantee’ offered by the PBGC [federal Pension Benefit Guaranty Corporation] was quite small, far less than the benefit formula suggested people would get.”

“Why the union [hierarchy] agreed to that arrangement seems like the key question,” Mitchell said.

Besides being a tragedy, the state of unionized multi-employer pensions is another illustration of just how little union bosses deserve their forced-dues privileges.